Surprise job losses in state just blip or start of bad trend?

Washington state unexpectedly lost jobs last month for the first time this year, but economists disagreed over whether the slump represents a temporary blip or a stall in the recovery that could last until at least Election Day.

Washington state unexpectedly lost jobs last month for the first time this year, but economists disagreed over whether the slump represents a temporary blip or a stall in the recovery that could last until at least Election Day.

The private sector shed 1,400 jobs, while the public sector added 300 jobs, for a net decline of 1,100 jobs in August, according to the state Employment Security Department.

Job losses were highest in wholesale and retail trade as well as leisure and hospitality, industries that are sensitive to consumer and business confidence.

The decline stood in stark contrast to a spring hiring boom led by the private sector. In May and June, employers added 13,200 and 12,200 jobs, respectively. Growth slowed to 5,900 jobs in July, still well above the average over the past 12 months.

Meanwhile, the unemployment rate in Washington state rose to 8.6 percent in August.

Experts say the region's economy has been slowing along with the national economy, but they didn't expect to see job losses.

"On the whole, the numbers are not very encouraging," said Christina Tapia, an adjunct professor at Seattle University and economist at Nickerson & Associates in Seattle.

"The best-case scenario is that this is just a blip," she said. "The worst-case scenario is that this is signaling there's significant weakness in the economy."

Businesses may be holding back, like Oki Golf did. The Bellevue company, which manages nine golf courses across the Puget Sound region, depends on both household and corporate budgets for its growth.

It normally ramps up to as many as 1,000 staff during the summer and keeps about 600 staff year-round.

"We just made a conscious decision to try to do more with less, be more efficient with our labor, being sensitive to the economy and not sure about what the market could bear with discretionary income," she said.

Joe Elling, the chief labor economist for the Employment Security Department, said he was cautious about making too much of August's job loss because it could be due to measurement error and revised in next month's report.

Indeed, the state said Wednesday that July's estimate of 5,000 jobs gained was revised to 5,900, an 18 percent increase.

Similarly, Elling cautioned against "interpreting this as a dramatic slowing in the growth rate because the rate we were seeing in May and June was not sustainable."

Nevertheless, there was positive news in some sectors. The construction sector added 1,900 jobs in August, leading all other industries in job growth, thanks to a strong wave of apartment construction, especially in Seattle.

Sectors that depend on consumer demand shed the most jobs: Wholesale trade lost 2,600 jobs; retail trade, 1,600; and leisure and hospitality, 2,300. Professional and business services declined by 200 jobs, while transportation, warehousing and utilities lost 100 jobs.

There are pockets of confidence even in those sectors. Michael Lee, owner of Express Employment Professionals in Seattle, a staffing-agency franchise that serves offices and warehouses, said he was seeing a big increase in demand for workers from companies that install office furniture.

Companies "are paying money to rearrange offices and move people out of cramped quarters they hunkered down in during the recession," he said. "There's a little more discretionary income that they're willing to part with."

An estimated 301,700 people in Washington were looking for work last month, officials said, and about 3,429 unemployed workers ran out of unemployment benefits.

The Seattle area's unemployment rate rose to 7.7 percent in August, up from 7.5 percent in July, but down from 8.4 percent a year ago.

The state Economic and Revenue Forecast Council doesn't expect statewide unemployment to drop below 8 percent until late 2014.

Steve Lerch, the council's executive director, said Wednesday he was "a little bit surprised" to see August's job losses. He noted that surveys show consumer confidence is low.

"If you're nervous, I don't think that encourages you to go on vacation and buy stuff. I think consumers are really holding back to see what happens," he said.

Lerch said that coming out of the recession, employers have squeezed more productivity out of their workers and managed without new hires.

Still, there were about 2.89 million people working in nonfarm jobs in Washington last month, compared with 2.77 million in February 2010, the low water mark for employment.

August's job losses and higher unemployment rate also were accompanied by more people dropping out of the labor force, a trend throughout the recovery. Economists say it's unclear whether those workers are retiring, going back to school or doing something else.

"Maybe next month we'll have some better figures, but I'm not very optimistic we'll have anything very different until businesses have more certainty about what the future will bring," economist Tapia said.

"They don't want to make long-term decisions when they don't know what the next administration will be and what the future holds."